Post Finance: Saving has never been more important

IF Britain’s economy hits the feared ’double dip’, either because of the sinking eurozone or for reasons closer to home, millions of households have minimal savings as a cushion if their main income is lost.

IF Britain’s economy hits the feared ’double dip’, either because of the sinking eurozone or for reasons closer to home, millions of households have minimal savings as a cushion if their main income is lost.

New research from personal finance website unbiased.co.uk claims more than 15 million adults in Britain could face severe financial problems; it says 39% of 35- to 54-year-olds admit they would struggle if they lost their job, sharply up on the 28% response recorded a year ago.

Younger people (18-34) are less worried – at 34% and 30% respectively, possibly because they have fewer commitments, such as mortgages and rents, to meet.

Karen Barrett, chief executive of unbiased.co.uk, says: “The state of our financial climate is beginning to hit home and our research shows many people would struggle if they lost their jobs.

“In a critical and unpredictable time, consumers do not know which way to turn for the best and it is vital they seek professional financial advice for their situation, for now and the long term.”

Unbiased.co.uk represents financial advisers, and many consumers hesitate to pay the £100 per hour which advisers charge. But many are comforted by the thought of insurance cover which delivers a regular income if they lose their regular employment.

However, even the most prudent consumers have had their confidence in financial services severely dented by the payment protection insurance (PPI) fiasco unfolding before our eyes.

The Competition Commission says consumers were overcharged by £1.4 billion on PPI policies, while the financial services industry - banks, building societies and card companies – raked in annual profits of £5 billion.

Against this troubled background, Nationwide Building Society bravely launched a new product – Lifestyle Protector – as an innovative and flexible short-term income protection policy to protect households through the worst.

It is designed to provide a monthly income benefit which can be used to cover any monthly outgoings, from mortgage and rent to utility bills, gym and mobile phone bills, all under one standalone policy.

Nationwide head of general insurance John Baker says: “In uncertain times, it makes sense to protect against loss of income, but few employers provide anything like an employee’s usual level of income during a period of prolonged sickness.

“Even if customers have no significant debts, they will still have to meet everyday expenses to maintain their usual standard of living.

“Unemployment is a big fear, so if you are cost-conscious, you can decide what you need to guard against and what level of monthly income you require, even down to a gym membership, if necessary.

“When the policy pays out, money goes direct to the consumer, so it is up to them what they do with it.”